Taking Hungary as a case study representative of post-socialist states, the paper explores the the incidence fuel poverty in this natural gas-dependent Central European nation and assesses the suitability of advanced residential energy efficiency solutions from a welfare economics perspective. For this, it first provides an estimation of fuel poverty rates based both on the UK expenditures-based approach and on the consensual or self-reported approach in order to conclude that as of the late 2000s fuel poverty was affecting between 10 to 30 % of the Hungarian popula­tion. The paper then presents the main assumptions of a cost-benefit analysis (CBA) aimed at evaluating the financial and welfare effects of applying two types of residential energy efficiency retrofits (already tested in pilot experiences in Hungary) to the country’s currently existing residential stock. Based on the results of the CBA, a second key conclusion is that improving the energy efficiency of Hungary’s residential buildings to high (near passive-house) levels results in large positive net welfare gains for Hungarian society in the long-term. The comparison of financial and social cost-benefit indicators also suggests that the valuation and incorporation of non-market co-benefits such fuel poverty alleviation and air pollution reduction increases the attractiveness of advanced retrofits from a policy-making perspective.